SUBSCRIBE to Capitol Fax      Advertise Here      Mobile Version     Exclusive Subscriber Content     Updated Posts    Contact
CapitolFax.com
To subscribe to Capitol Fax, click here.
Rauner focus shifts from the Caymans to Bermuda

Friday, Aug 8, 2014

* Illinois Public Radio

Bruce Rauner says there’s “nothing sinister” about venture capital firms using the Cayman Islands as a tax shelter, but says he has never used the investment vehicle for his personal benefit. […]

Until he stepped down to run for governor, Rauner was head of a capital investment firm, GTCR, which has several investment pools there.

At an appearance at the Illinois State Fair last night, Rauner — wearing a plaid shirt, jeans and brown boots — insisted it’s a “widespread, common practice.”

“What my firm did is what many, many financial firms do and I think the majority of venture capital firms and private equity firms do, and that is - when they invest in a foreign company, a non-U.S. company, they’ll set up an investment vehicle, often in the Caymans, so that their limited partners are treated, for tax purposes, the same way as, as if it was a U.S. company.”

He ran GTCR, so if his firm made money off Caymans investments, then he personally profited.

* But the focus is shifting today to another island nation, Bermuda

The onetime head of a company tied to Bruce Rauner and an associate — men the GOP candidate for governor Thursday called “rogue employees” — have been indicted in federal court in New Jersey on charges they stole millions of dollars in a sophisticated trading fraud.

Anthony Blumberg, 49, of New Jersey, and Craig Marshall, 47, of Bermuda worked for ConvergEx Global Markets Limited, a Bermuda-based broker and subsidiary to a firm Rauner’s former private equity company helped found.

Blumberg and Marshall were indicted late Wednesday on criminal charges of securities fraud, wire fraud and conspiracy to commit securities and wire fraud.

The indictment is here.

* More

“These were rogue employees at a subsidiary of a company GTCR had invested in,” Rauner campaign spokesman Mike Schrimpf said. “The employees were fired, and ConvergEx cooperated with the investigation. What they are alleged to have done is unacceptable, and they are rightfully being prosecuted.” […]

Rauner joined GTCR in 1981 and was its chairman until stepping down in October 2012 but “had no say in hiring either of the two people,” Schrimpf said.

* Background info from the Quinn campaign…

GTCRauner formed ConvergEx in October 2006 and installed Blumberg as CEO that very month until 2011: http://www.convergex.com/about-us/history

GTCR was the largest shareholder and controlled the board (they had more seats than any other partner)

GTCR features ConvergEx on its website as an example of a successful company: http://www.gtcr.com/our-focus/financial-services-technology/portfolio/convergex-group

Rauner told Chicago Magazine in 2011 that GTCR’s - his- whole business strategy was handpicking executives. Here’s the profile. http://www.chicagomag.com/Chicago-Magazine/June-2011/GTCRs-Bruce-Rauner-Talks-Investments/ Here’s Rauner’s q&a in the article:

    Q: Most private equity firms buy mature companies and unwanted divisions of large corporations, managements intact. But you seem to go out and find management and then, together with them, go buy the companies.
    Rauner: We’re in two businesses: industry research and executive recruiting. We study industries, and we network like crazy to find the superstars. Today, we’re partners with two dozen CEOs. Some we’re backing for the second, third time. It can take from six months to nine years from the time we meet someone until we actually become partners with each other.

    Q: But sizing up the executive is nearly everything?
    Rauner: A lot of reference checking. Are they winners? How did they handle failure in their careers? We go to all the trade shows. We call it the leader strategy. Deal flow comes to them. Talented executives come to them.

Key Point: Now GTCR Chairman Rauner wants to pretend he has nothing to do with the guy who was put in place by GTCRauner to be the CEO of ConvergEx from Day One when GTCR was in charge every step of the way? How stupid does he think we are?

* Background info from the Rauner campaign…

BNY and GTCR were equal investors in Convergex. Convergex though was staffed with BNY executives. As shown below, Blumberg was already with BNY and had been since 2002. He came with the deal.

    Anthony Blumberg Came Into Convergex From Bank Of New York-Mellon. “BNY ConvergEx management includes Velli, Kerry Pack, John Meserve, Anthony Blumberg, George Costafos and Charlie Raphold from BNY. The trading grossed $297 million last year. Tom Gavin, David Quinlan and Jeff Shoreman make up the Eze contingent. The vendor grossed $43 million last year. Much of that is recurring or commission-like coming from routing orders to brokers. Goldman Sachs, previously a large owner of Eze Castle, does not have a stake in BNY ConvergEx. Operations will be split between New York and Boston, Eze’s current headquarters. The deal is expected to close this year.” (Peter Chapman, “BNY ConvergEx Eyes Hedge Funds with Eze Merger,” Traders Magazine, 8/1/06)

    Anthony Blumberg Originally Worked For Credit Lyonnais, And Then Bank Of New York-Mellon, Before Joining Convergex. “Prior to the formation of ConvergEx Group, Mr. Blumberg served as a Managing Director at Credit Lyonnais Securities where he established G-Trade Services, one of the world’s largest global portfolio trading groups, which was later acquired by The Bank of New York and became a part of BNY Securities Group in 2002.” (“Our Leadership Team,” Archived Convergex Webpage, 2/10/11)

…Adding… More from the Rauner campaign…

(T)he Quinn fact sheet you just put up on ConvergEx is false and intentionally misleading. It’s not a typo, the Quinn campaign has repeatedly tried to mislead the public over the last 16 hours by claiming Mr. Blumberg was the CEO of the entire CovergeEx company to give the false impression that he was hired by or otherwise directly connected to Bruce Rauner.

That’s simply false. He was the CEO of a subsidiary to ConvergEx who was hired by Bank of New York Mellon in 2002, four years before GTCR invested. Additionally, GTCR was not the “largest shareholder” of Convergex. It was an equal investor with BNY Mellon, which is why the firm’s and its subsidiary’s leadership, including Blumberg, came over from BNY Mellon.

- Posted by Rich Miller        


25 Comments
  1. - South of Sherman - Friday, Aug 8, 14 @ 10:08 am:

    At what point does the glut of “rogue employees” in Rauner’s private companies start to raise red flags about the management style he would use as governor?


  2. - Jimmy - Friday, Aug 8, 14 @ 10:10 am:

    Great, what Illinois needs now is another Governor in trouble with the Feds. Between this and his “donation” to Walter Payton High School, Rauner certainly is giving public corruption watchdogs a lot to scrutinize these days.


  3. - so... - Friday, Aug 8, 14 @ 10:12 am:

    Sorry, Brooke and co., the very first line of your “research” is wrong. Convergex’s CEO was a dude named Joseph Velli (who has not been charged with anything). Blumberg was the head of a subsidiary.

    http://web.archive.org/web/20110210204458/http:/www.convergex.com/about/OurLeadershipTeam.aspx


  4. - Rich Miller - Friday, Aug 8, 14 @ 10:14 am:

    ===Convergex’s CEO===

    I think that’s just a typo. She meant ConvergEx Global.


  5. - Commander Norton - Friday, Aug 8, 14 @ 10:15 am:

    I’m fairly certain Bermuda is not located in the Caribbean. It’s actually about due east of Charleston, South Carolina.


  6. - OneMan - Friday, Aug 8, 14 @ 10:16 am:

    == At what point does the glut of “rogue employees” in Rauner’s private companies start to raise red flags about the management style he would use as governor? ==

    About the same time being Lt. Governor and standing up for a guy who was convicted of multiple felonies is….


  7. - Rich Miller - Friday, Aug 8, 14 @ 10:17 am:

    Commander Norton you are absolutely right. I’m embarrassed by that mistake. Sheesh. Fixed. Thanks!


  8. - Oswego Willy - Friday, Aug 8, 14 @ 10:24 am:

    To the Post,

    The accountability that Rauner accepts, versus what is expected is just mind-blowing.

    Rauner has been successful at everything he has ever done an built successful businesses…except when he hasn’t?

    Rauner gets only a portion of the credit for all his successes, and just a portion of all these failures.

    That’s a part of living and honest life, or bring honest about how you live your life.

    No extremes. No absolutes. No worries then how you are seen.


  9. - William j Kelly - Friday, Aug 8, 14 @ 10:29 am:

    I am starting to wonder if rauner has ever meet any of his employies (rouge or otherwise) or if rauner has any hands on experience with his ‘business’ at all! The Republican Party really needs to get a grip and demand rauner step aside. replace rauner now!


  10. - Snucka - Friday, Aug 8, 14 @ 10:30 am:

    For a guy who wants to hold Pat Quinn accountable for everything that happens in Illinois government, Bruce Rauner is very selective in the responsibility he takes for what happened while he was at GTCR.


  11. - William j Kelly - Friday, Aug 8, 14 @ 10:34 am:

    Bruce rauner the Rahmchurian candidate!


  12. - Rod - Friday, Aug 8, 14 @ 10:41 am:

    This story about Rauner’s choice of leaders for firms he controlled is relevant to his leadership skills, just like the choices that have gone bad made by Quinn. In this regard voters will have to decide who is worse, I think Rauner was worse.


  13. - PublicServant - Friday, Aug 8, 14 @ 10:46 am:

    Expect to see those two working a IDOT if Rauner wins.


  14. - walker - Friday, Aug 8, 14 @ 10:49 am:

    Bermuda provides other regulatory and taxation relief, and some opacity. There are plenty of decent business and finance folks who use multiple “havens”,(probably about a dozen locales all told) but the few bad operators can flourish in them.

    If your business includes breeding and feeding crocodiles, well, they can bite you.


  15. - Chris - Friday, Aug 8, 14 @ 10:56 am:

    “if his firm made money off Caymans investments, then he personally profited”

    And so did the state pension fund that was invested in GTCR funds.


  16. - wordslinger - Friday, Aug 8, 14 @ 10:59 am:

    Sgt. Schultz is still talking about the Caymans. How hard is it to answer every question: “Pat Quinn’s failure to……


  17. - Grandson of Man - Friday, Aug 8, 14 @ 11:16 am:

    “For a guy who wants to hold Pat Quinn accountable for everything that happens in Illinois government, Bruce Rauner is very selective in the responsibility he takes for what happened while he was at GTCR.”

    Well said and great point.

    Some Rauner supporters have been overcome by the hallucinatory fumes of Rauner’s statements on how he’ll run Illinois. It’s only fair to look at the entire business picture, and that includes management of the nursing homes and long-term care homes.


  18. - A guy... - Friday, Aug 8, 14 @ 12:15 pm:

    === Rich Miller - Friday, Aug 8, 14 @ 10:17 am:

    Commander Norton you are absolutely right. I’m embarrassed by that mistake. Sheesh. Fixed. Thanks!===

    Here’s a related bonus question to make up for the Bermuda miscue….Where is the island of Kokamo?


  19. - PoolGuy - Friday, Aug 8, 14 @ 12:22 pm:

    A guy - Indiana?


  20. - Ghost - Friday, Aug 8, 14 @ 12:40 pm:

    Which raises the side question, would people look at this despicable deed and think its bad, or would they think this is just the way you make money today….

    Antecdotally I have been surprised by people who seem to have a strong reaction to Governemnt corruption; but not so much outrage when it comes to the private sector.


  21. - Conservative Republican - Friday, Aug 8, 14 @ 1:21 pm:

    ==Antecdotally I have been surprised by people who seem to have a strong reaction to Governemnt corruption; but not so much outrage when it comes to the private sector.==

    The reason for my lessened outrage is 1) no proof of any contemporaneous knowledge of any wrongdoing by the “rogue employee”– they came to the table with hefty financial industry resumes. 2) the guys are under federal indictment which means almost certain prison time at most and very hefty legal fees at least– why any outrage when they are getting their just desserts? 3) Why don’t you prove to me that government corruption crimes are more vigorously addressed and prosecuted than “private sector” crimes? I don’t think you can.


  22. - Ghost - Friday, Aug 8, 14 @ 1:44 pm:

    === 3) Why don’t you prove to me that government corruption crimes are more vigorously addressed and prosecuted than “private sector” crimes? I don’t think you can. ===

    thats lopw hanging fruit…. how many Governors are in jail from il, and how many execs from the large financial institutions who collapsed the economy are in jail.


  23. - A guy... - Friday, Aug 8, 14 @ 2:00 pm:

    === PoolGuy - Friday, Aug 8, 14 @ 12:22 pm:

    A guy - Indiana?===

    Ding ding! who knew PoolGuy was also a BeachBoy? lol


  24. - walker - Friday, Aug 8, 14 @ 2:56 pm:

    What counts politically is public perception.

    For many, the term “corrupt” covers a wider range of activities than “criminal.” Giving your relative a government job, might be accomplished legally, and still be seen as corrupt. A crime depends on the law and jurisdiction.

    For me, unfairly cornering a market in a country without strict market participation regulations, or misleading other market participants by withholding pertinent financial information, in a country without serious disclosure requirements, are “corrupt” because they harm or prevent efficient free market operations, — even though they might not be “criminal.”

    One of the ways to consistently make higher returns is to take greater risks. That’s how it works in an “efficient” free market. Everyone knows that.

    Another route to consistently higher returns, without apparently taking greater risk, is by evading normal regulation or by cramping or manipulating markets in ways that wouldn’t be acceptable in the USA. The reach of our laws does not extend in every case.

    “Ugly” or “wrong” or “unfair” are terms broader still, but those perceptions have political impact.

    We’ll see how well the Rauner team can avoid the potential image traps associated with where he invested much of his or his clients’ money. This is beyond any problems they might have with his wealth alone.

    So far they are doing well, but it’s a difficult spot.


  25. - JS Mill - Friday, Aug 8, 14 @ 3:55 pm:

    Rauner sees corruption through two different lenses, the corruption of others and, his actions. If someone he is opposed to does something he does not like, they and their actions are corrupt. If he does something that others may find questionable or outfit corrupt, the Rauner response is that it is common practice ( moral relativism) or the organization is too big/ I can’ t be held accountable for every employee (the buck does not stop here).


Sorry, comments for this post are now closed.


* *** UPDATED x1 *** *** LIVE *** Leaders meeting coverage
* Reader comments closed for the weekend
* Mendoza transition team responds to the Sun-Times' Madigan conspiracy theory
* *** UPDATED x1 - Durkin responds *** Back to the future: Madigan demands "memorandums of understanding"
* Question of the day
* Shimkus loses out on plum post
* *** UPDATED x1 *** Moody's says Rauner veto is just one of many problems facing CPS
* *** UPDATED x4 - Mendoza responds - Munger calls suit "cowardly" *** Lawsuit filed over legislator pay
* The "green energy" side of the Exelon bill
* Caption contest!
* How is this "breaking our agreement"?
* Positioning, practicalities and politics weigh heavily against a House override
* Report: A decade to reach solvency, if leaders cooperate on tough plan
* *** UPDATED x2 *** Rauner goes into the lion's den
* SUBSCRIBERS ONLY - Today's edition of Capitol Fax (use all CAPS in password)
* Yesterday's blog posts

Support CapitolFax.com
Visit our advertisers...

...............

...............

...............

...............

...............
<


Search This Blog...

Search the 98th General Assembly By Bill Number
(example: HB0001)

Search the 98th General Assembly By Keyword

  
* Will cost kill the Smart Home? Or is it already destined to happen?
* How AMOLED technology works
* Google is opening up Santa’s Village until December 24th
* Apple VP of Special Projects Paul Deneve Removed From Leadership Webpage [Update: Still at Apple]
* Lenovo Phab 2 Pro Video Review: More than just Tango?
* You can now play Oprah Winfrey’s mobile game on your Android device
* Copy and paste trick could unlock iOS 10 devices in Lost Mode

* White Sox plans could clear up at Meetings
* Lawrie, Garcia settle with White Sox for 2017
* Garcia, Lawrie settle with White Sox for 2017
* Peace & glove: Owners, players reach CBA deal
* White Sox plans could clear up at Meetings
* Garcia among White Sox non-tender options
* White Sox plans could clear up at Meetings

...............


Main Menu
Home
Illinois
YouTube
Pundit rankings
Obama
Subscriber Content
Durbin
Burris
Blagojevich Trial
Advertising
Updated Posts
Polls

Archives
December 2016
November 2016
October 2016
September 2016
August 2016
July 2016
June 2016
May 2016
April 2016
March 2016
February 2016
January 2016
December 2015
November 2015
October 2015
September 2015
August 2015
July 2015
June 2015
May 2015
April 2015
March 2015
February 2015
January 2015
December 2014
November 2014
October 2014
September 2014
August 2014
July 2014
June 2014
May 2014
April 2014
March 2014
February 2014
January 2014
December 2013
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
April 2013
March 2013
February 2013
January 2013
December 2012
November 2012
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010
August 2010
July 2010
June 2010
May 2010
April 2010
March 2010
February 2010
January 2010
December 2009
November 2009
October 2009
September 2009
August 2009
July 2009
June 2009
May 2009
April 2009
March 2009
February 2009
January 2009
December 2008
November 2008
October 2008
September 2008
August 2008
July 2008
June 2008
May 2008
April 2008
March 2008
February 2008
January 2008
December 2007
November 2007
October 2007
September 2007
August 2007
July 2007
June 2007
May 2007
April 2007
March 2007
February 2007
January 2007
December 2006
November 2006
October 2006
September 2006
August 2006
July 2006
June 2006
May 2006
April 2006
March 2006
February 2006
January 2006
December 2005
April 2005
March 2005
February 2005
January 2005
December 2004
November 2004
October 2004

Blog*Spot Archives
November 2005
October 2005
September 2005
August 2005
July 2005
June 2005
May 2005

Syndication

RSS Feed 2.0
Comments RSS 2.0
WordPress

Loading


* Impact of Exelon energy bill uncertain for busi.....
* Illinois leaders differ on progress in meeting .....
* Madigan cites ‘lack of trust’ with Rauner as bu.....
* Illinois leaders differ on progress in meeting .....
* Our View: You’ve got to be kidding! 6 Democrati.....
* Think Springfield can borrow its way out of tro.....
* Illinois Leaders Differ on Progress in Meeting .....


* Ukulele is a popular music-class addition
* Illinois leaders differ on progress in meeting with governor
* Illinois leaders differ on progress in meeting with governor
* Universities exploring 'sanctuary' status for immigrants
* Ex-assessor get 1 year in prison for extorting bribes
* Illinois officials review child's death at Chicago day care
* State high court to hear wind power appeal
* State high court to hear wind power appeal
* Southwestern Indiana plane crash kills lone person aboard
* Rauner names members of Illinois Bicentennial Commission

* Lawmakers sue comptroller for not paying them
* Electronic road signs are dark near Effingham due to budget
* State lawmakers vote to spare 2 nuclear plants
* Legislature OKs Exelon subsidy plan, goes to Rauner
* Rauner: No more stopgap budgets without property tax freeze, term limits
* Illinois shutters nation's last prison roundhouse
* Clinton nuclear plant has history of cost, job uncertainty
* AFSCME files lawsuit over labor contract
* Rauner to Dems: No budget without term limits, property tax freeze
* AFSCME files suit over labor contract

* A right hook to men and women hurt on the job
* Nothing brings pols together like a bailout
* Drink up, Chicago. Jim Beam's in town now
* Think Springfield can borrow its way out of trouble? Think again
* A top Clinton fundraiser, a target during the election, regroups


* Woman battered and robbed in Naperville
* Eric Semborski lives out dream as Hawks emergency backup
* Man shot in foot in Grand Crossing
* Man seriously hurt in apparent self-inflicted Englewood shooting
* Veterans call on NFL star Kaepernick to stand at Sunday’s game
* Inside the Huddle: Can Matt Barkley win over Bears with his play?
* Man, woman dead from stab wounds in Posen
* Chris Mason’s appendectomy offers insight to Crawford’s road back
* 2 men charged with Wrigleyville armed robberies
* Fire chief: 9 killed in Oakland, California, warehouse fire


* Woman, 60, grazed by gunfire among 4 wounded on South Side
* Madigan cites 'lack of trust' with Rauner as budget meetings continue
* Players: Steve Kerr's marijuana admission could spark dialogue about use for pain relief
* Ryan isn't ruling out Medicare privatization, and it isn't just Democrats who are wary
* Officials prepare for dozens of fatalities from fire during party at Oakland warehouse
* Trump shrugs off fuss over Taiwan call
* Massachusetts firefighters battle large blaze in Cambridge
* Bergdahl seeks pardon from Obama to avert desertion trial
* Blackhawks lose goalie Corey Crawford to emergency appendectomy, then lose 3-1 to Flyers
* Woman, man die after being found wounded in Posen home, authorities say


The widget AQL4JYGHIY powered by Feed Informer does not exist.


* Guest Column: Where is the bailout for human services?
* Charles Krauthammer: After a mere 25 years, the triumph of the West is over
* Lawmakers sue comptroller for not paying them
* Electronic road signs are dark near Effingham due to budget
* State lawmakers vote to spare 2 nuclear plants
* Legislature OKs Exelon subsidy plan, goes to Rauner
* Our View: This Week’s Thumbs up/Thumbs Down
* Rauner: No more stopgap budgets without property tax freeze, term limits
* Illinois shutters nation's last prison roundhouse
* Clinton nuclear plant has history of cost, job uncertainty


* Illinois Men's Basketball: vs. Virginia Commonwealth
* HS Girls' Basketball: CH Central vs. Normal Comm
* LIVE! VCU
* "Tears of happiness" for safe return of missing Rantoul boys
* Accused murderer pleads guilty to lesser charge
* Episcopal church hosts concert with Taizé monastery music
* Construction set to begin for Marion Fire Station's parking lots and drive
* County gets grant for mentally ill work
* Family, friends, military and strangers salute soldier who died 66 years ago
* Tuscola Christmastown Parade 2016


* Rask stops 35 shots in Bruins' 2-1 win over Sabres
* Sea of Santas fills streets of downtown Arlington Heights
* Ertz runs for career-high 170 yards as K-State tops TCU 30-6
* Elgin police: Man dies after single-vehicle crash
* Crawford undergoes emergency appendectomy

* House lawmakers overcome hurdle on key tra...
* Rodney Davis talks funding with Bloomingto...
* The agency that fought Illiana gets a new ...
* Rep. Dold takes educational cruise down Ch...
* Lawmakers decry high turnover rate of VA h...
* CBD Oil, and politics
* Simon considering state Senate bid
* Killer Congressman Tom MacArthur trying to...
* Shutdown? State may not notice
* Rep. Bob Dold

* Sen. Dick Durbin Unveils Protection Effort......

* SEIU leaders say planned Monday strike by ......

* #TBT. Los Angeles. 1963. Fighting segregation.
* Peace through fear.
* On the day Trump formally handed the U.S. government over to Wall Street Executives (and not the first time this has happened by any means).
* Get it in writing? It is in writing. It’s called the pension protection clause of the Illinois Constitution.
* Chicago Cubs co-owner Todd Ricketts to be Trump's deputy commerce secretary
* What would you do for a plate of frog legs?
* The kingdom of heaven.
* Rep. Ives spells out opposition to Exelon bailout bill
* Illinois Review readers most "liked" stories for first week in December 2016
* Chicago Chamber, Retail Merchants' report calls for Exelon bailout to save nuclear plants


* Thanksgiving Holiday Travel Brings Lowest Fatality Rate In Six Years
* Governor Announces Appointments to Illinois Bicentennial Commission
* Stateville Correctional Center’s F House Officially Closed
* Governor Takes Bill Action
* IEMA Highlights Safety during the Holidays - Encourages holiday shoppers to give preparedness gifts this year




      Hosted by MCS SUBSCRIBE to Capitol Fax Advertise Here Mobile Version Contact Rich Miller